March 26, 2020

COVID-19: ESMA Delays New Reporting Regime for Repos, Securities Lending and Buy Backs for EU Banks and Investment


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COVID-19: ESMA Delays New Reporting Regime for Repos, Securities Lending and Buy Backs for EU Banks and Investment Firms

The European Securities and Markets Authority (ESMA) has announced[1] regulatory forbearance for banks and investment firms subject to the upcoming reporting obligation under the Securities Financing Transaction Regulation (SFTR).[2] The SFTR requires all securities financing transactions (SFTs) to be reported to EU-recognized trade repositories. SFTs involve the use of securities to borrow cash or other high investment-grade securities and include repurchase transactions, securities lending and sell/buy backs. The reports must include details on the composition of collateral, whether collateral is available for reuse or has been reused, the substitution of collateral and any haircuts applied. The reporting obligation applies to Financial Counterparties (FCs) and Non-Financial Counterparties (NFCs), and relevant third-country entities. For non-EU entities, SFTR will not apply to require reporting directly. However, EU counterparties of in-scope transactions to non-EU entities will need to report. There are certain exceptions for counterparties such as central banks and similar bodies. The table in the annex to this note sets out the applicable counterparties.

Reporting is “two sided,” so each entity is responsible for its own reports, except for transactions between an FC and a small NFC, in which case the FC is responsible for reporting the transaction. It is also possible to delegate reporting. The SFTR phases in the reporting obligation according to type of entity:[3]

  • Banks and investment firms from April 13, 2020;
  • CCPs and central securities depositories (CSDs) from July 13, 2020;
  • Other FCs from October 12, 2020; and
  • NFCs from January 11, 2021

EU banks and investment firms have been rolling out necessary diligence to categorise their clients and confidentiality waivers ahead of the launch, as well as installing new IT systems to report. ESMA’s regulatory forebearance delays the reporting obligation for banks and investment firms from April 13, 2020 to July 13, 2020 and is granted in the light of the resource restrictions of counterparties and trade repositories as a result of the COVID-19 pandemic. The forebearance applies to the reporting obligations related to SFTs under both the SFTR and the Markets in Financial Instruments Regulation.

ESMA states that it expects national regulators not to prioritise their supervisory actions towards any entity that was due to become subject to the obligation in April. The forebearance applies for any SFTs concluded until July 13, 2020, as well as to SFTs that are subject to the backloading requirement.[4] The U.K. Financial Conduct Authority has confirmed that it will not prioritise supervision of the reporting requirements until at least July 13, 2020 and will not require firms to back report any SFTs concluded between April 13, 2020 and July 13, 2020.[5]

In addition, ESMA states that it is not necessary to register any trade repositories for the purpose of SFTR before July 13, 2020. This allows trade repositories the additional time to deal with the pandemic, however, ESMA expects all trade repositories to be registered with it in time for the July 13, 2020 reporting date.

ESMA’s regulatory forebearance will be welcomed by banks and investment firms. However, those entities subject to the reporting obligation had hoped that it would be delayed until October 12, 2020, including for CCPs and CSDs. ESMA is monitoring the situation, but it is not certain that a further delay is coming.

Annex: Counterparties Subject to the SFTR



EU counterparty to a SFT

All branches of an EU counterparty to a SFT, irrespective of where they are located

EU branches of third-country counterparty if the SFT is concluded in the course of business of the EU branch

UCITS Management/Investment Companies

Alternative Investment Fund Managers (AIFMs)

The European Commission has confirmed that non-EU AIFs are not in scope even if managed by an EU AIFM, unless the SFT is concluded in the course of the operations of the EU branch of the non-EU AIF

EU counterparty engaging in reuse

EU branches of third country counterparty engaging in reuse if the reuse is concluded in the course of operations of the EU branch

A counterparty engaged in reuse where the reuse concerns financial instruments provided under collateral arrangement by (i) a counterparty established in the EU or (ii) an EU branch of a counterparty established in a third country


  • Financial Counterparties - EU established and authorised credit institutions, investment firms, insurance companies, UCITS and their managers, AIFs by EU authorised or registered AIFMs, occupational pension schemes, CCPs, CSDs, and third country entities which would be financial counterparties if they were established in the EU
  • Non-financial Counterparties - including third country counterparties which would be non-financial counterparties if established in the EU


[1]   ESMA’s statement on regulatory forebearance for SFTR reporting was published on 19 March 2020.
[2]  Regulation (EU) 2015/2365 on transparency of securities financing transactions and of reuse and amending Regulation (EU) No 648/2012.
[3]  Details of the reporting requirements are set out in Commission Delegated Regulation (EU) 2019/356 of 13 December 2018 supplementing Regulation (EU) 2015/2365 of the European Parliament and of the Council with regard to regulatory technical standards specifying the details of securities financing transactions (SFTs) to be reported to trade repositories.
[4]  On March 26, 2020, ESMA updated its original statement to clarify that SFTs subject to the backloading also benefit from the regulatory forbearance until July 13, 2020.

Authors and Contributors

Barnabas Reynolds



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+44 20 7655 5528


Thomas Donegan



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Sandy Collins

Professional Support Lawyer


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